European markets rebound in early deals

Europe's main stock markets rebounded on Wednesday, recovering partly from sharp losses following Greece's surprise decision to call a referendum on its latest EU bailout. Shell-shocked investors digested news that Greek Prime Minister George Papandreou had secured the unanimous backing of his cabinet for a referendum and for a parliamentary vote of confidence on his government. In early morning trading, London's benchmark FTSE 100 index added 0.52 percent to 5,450.45 points, Frankfurt's DAX 30 won 1.39 percent to 5,913.59 points and in Paris the CAC 40 gained 1.51 percent to 3,114.63. Milan's FTSE Mib index meanwhile rallied 1.46 percent to 15,143.68 points, one day after slumping by 6.8 percent on mounting concern that Italy is being dragged into a debt crisis. Athens meanwhile rose 0.74 percent, after a slump of 6.92 percent Tuesday in response to the calling of a referendum. In foreign exchange deals, the euro rose to $1.3760, compared with $1.3697 late in New York on Tuesday. However, Asian markets fell earlier on Wednesday, taking a lead from Wall Street amid fears that a Greek referendum on its latest bailout deal could derail the Europe's grand plan to fix the region's crushing debt crisis. "Investors remain extremely wary," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers in London. "The future of Europe, and with it, potentially the health of the global economy, continue to hang in the balance," he warned. German Chancellor Angela Merkel and French President Nicolas Sarkozy have summoned Papandreou to a meeting Wednesday, on the eve of the opening of the G20 summit in Cannes, where the crisis will top the agenda. "Essentially, the situation has not changed," said trader Simon Furlong at trading group Spreadex. "Markets seem to be rallying on speculation on a positive outcome from the meeting," he told AFP. "On top of this, there seems to be a slight correction happening, trying to retrace some ground lost from the heavy losses from the last two days. "Although the markets are up this morning, it should not be mistaken for any serious correction, there has been no positive news out as of yet." Papandreou's surprise call for a referendum and the possibility that the country's voters would reject the EU bailout plan sent US and European shares sharply downward Tuesday, while also taking a toll on oil prices. Bond markets were affected by fears that Italy could be the next eurozone nation to face a debt crisis, with the yield on the country's 10-year bonds hitting 6.2 percent, close to the record reached in August. In Asian stock market deals on Wednesday, Tokyo skidded 2.21 percent lower, Sydney lost 1.14 percent and Seoul shed 0.61 percent. On Tuesday, the single currency had tumbled as low as $1.3609, its lowest level since October 12 and well below the $1.42-level it reached last week as markets had welcomed the eurozone debt rescue plan unveiled in Brussels.